New York State Comptroller Thomas P. DiNapoli has issued an analysis of the impact of gambling on the state budget and residents in an effort to provide background for the expected debate on the expansion of casino gambling.
The 40-page report summarizes the degree to which New York depends upon gambling revenue to support public education. However, it does not gloss over the social impacts of gambling addiction and whether those most attracted to gambling have enough resources to lose money to the state.
The comptroller’s report points out the following:
■ New York’s dependence upon gambling receipts has grown for 20 years. Revenue has increased more than 5 percent a year while state tax revenue has risen only 4.2 percent a year over that period.
■ New York has the highest net gambling revenue of any state in the union. New York takes more money from gamblers than Florida and California combined.
■ While overall state revenues will grow as a result of new casinos, there is likely to be a negative impact on other New York state gaming income.
■ Other states have found that revenues have been lower than projected, and so the state Division of the Budget should be wary when it estimates the potential inflow of cash.
■ Most gamblers will be New Yorkers, thus diminishing the available pool of disposable income spent on all variants of New York gambling.
■ Research shows games such as lotteries appeal to lower-income individuals. A state-run betting enterprise is a reverse form of taxation that depends upon those at the lower end of economic spectrum rather than higher-income individuals with higher disposable income. And they feed those with gambling addictions.
Gambling revenues are relied on to balance state budgets. But over the last several years, income booked in other state capitals has declined. In New York, the Division of the Budget projects a decline in lottery ticket and Video Lottery Terminal gambling to decline slightly — even without the impact of casino gambling.
The danger is fairly simple. Overly optimistic projections of tax revenues will leave the state in a precarious position in several years.
Gambling revenues are not consistent and are exposed to competition from other states. It is not realistic to expect that most gamblers at New York’s new casinos will come from out of state. Instead, Mr. DiNapoli predicts that the influx of New Yorkers will shift gambling revenues from the games currently offered, negatively impacting state revenues.
While operating games of chance to finance state government should be prohibited, it is not and has been endorsed by New York voters. So putting aside opposition to gambling, it is only fair that New Yorkers insist that Gov. Andrew M. Cuomo and the state Legislature take a good look at the prospects for success.
Last week, developers of a proposed casino in Sullivan County canceled their plans, fearing competition from another casino closer to New York City. The New York Post is reporting stiff opposition to a casino in the capital region of Albany and Saratoga Springs. The gambling industry has been struggling with declining revenues. Caesar’s Entertainment shut the Harrah’s casino in Tunica, Miss., citing a betting decline from $1.2 billion in 2006 to $738 million last year. Bloomberg reports that New Jersey casino revenues have declined from about $4.9 billion to $2.8 billion over the last six years. Bloomberg also reported that gambling receipts have fallen for six consecutive months in Indiana, Missouri, Illinois and Michigan.
None of this bodes well for the financial prospects of the gambling initiative coming from Albany and makes it imperative that the state budget contain realistic projection numbers that fairly represent revenues. It does no one any good to make rosy predictions that will likely lead to another round of spending increases, thus leaving state taxpayers with another budget shortfall in the near future.